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Which one of the following transactions would be included in GDP? a. Ava pays $50 for a used picture frame at a neighborhood garage sale. b. Ethan donates $500 to his town's junior college scholarship fund. c. Emily pays $500 to fix the front end of her car damaged in a recent accident. d. Mia pays $5,000 to purchase 100 shares of Microsoft stock

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Answer:

The answer is: C) Emily pays $500 to fix the front end of her car damaged in a recent accident.

Explanation:

The formula for calculating GDP is:

               GDP = C + I + G + (X – M)

  • C: consumption of new, finished and legal products or services
  • I: investment
  • G: government
  • X: exports
  • M: imports

The $500 Emily paid to fix the front end of her car fits in the Consumption category (C) since it was a new, legal and finished service.

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